First-quarter statistics cast cloud over economic growth forecasts – experts
The economy will likely not see a quick recovery as uncertainties persist and are likely to impact the economy negatively going forward.
This is clear when looking at the first quarter statistics released by Namibia Statistics Agency (NSA) this week, which indicate that 13 of the 18 sectors recorded contractions in activity on an annual basis.
According to the NSA, the country’s real GDP declined by6.5% during the period under review, compared to a smaller contraction of 5.9% during the fourth quarter of 2020.
In its 16 June Monetary Policy Statement, the Bank of Namibia forecasted economic growth of 2.7% in 2021, however, analysts from IJG Research said based on the NSA statistics, it is evident that a significant uptick in GDP output is needed during the rest of the year for the country to achieve the central bank’s forecasted growth.
“The 8% contraction in real GDP in 2020, which followed four years of economic stagnation, has resulted in real economic activity falling to levels last seen in 2013. The compound annual growth rate experienced between 2015 and 2020 was -1.7%,” IJG said in its responsive first-quarter report.
IJG noted the poor performance of the wholesale and retail trade sector serves as evidence that consumer confidence remains very low, and that any recovery from here on will likely not be driven by consumer spending.
“Given the government’s weak fiscal position, investment, both foreign and domestic is crucial to turning the trajectory of the Namibian economy around. Namibia desperately needs policy reform thatis dedicated to attracting investment, removing red tape, and improves the ease of doing business,” IJG added.
Head of Research at PSG Wealth, Eloise du Plessis said shared the sentiment that the latest GDP figures are a severe blow to the country’s economic growth forecast, adding the construction industry’s slump continues unabated due to a lack of investment following a boom period in 2013 to 2015.
“The general recovery in commodity prices and economic growth inthe major economies observed in the first quarter of 2021 did not filter through to Namibia, due to the fact that Namibia’s main mineral exports (diamonds and uranium) did not benefit that much from these external improvements,” Du Plessis said.